Canadian cannabis institution Tilray Inc. has its eyes connected the U.S.
Tilray TLRY, announced Tuesday day that it has agreed to acquisition convertible bonds enactment guardant by U.S. cookware institution MedMen Enterprise Inc. MMEN, MMNFF, +1.49% arsenic it sought to debar insolvency. The woody could yet springiness Tilray a way to ain MedMen if marijuana is federally legalized successful the U.S.
“The concern we are announcing successful MedMen securities today, 1 of the astir recognized brands successful the $80 cardinal U.S. cannabis market, is simply a captious measurement toward delivering connected our nonsubjective arsenic we enactment to alteration Tilray to pb the U.S. marketplace erstwhile legalization allows,” Tilray Chief Executive Irwin Simon said successful a statement.
The maneuver is akin to what Canopy Growth Corp. CGC, -0.46% WEED, -0.14% pulled disconnected successful 2019 with Acreage Holdings Inc. ACRDF, -2.52%. Canadian cannabis companies cannot ain U.S. properties outright due to the fact that the cause is inactive amerciable astatine the national level successful the U.S., truthful they thin to bargain equity stakes that tin crook into ownership successful the lawsuit of a alteration successful U.S. law.
Tilray has conscionable undergone a merger with erstwhile rival Aphria, which the combined institution says makes it the largest cookware seller by revenue. MedMen was a blistery spot aboriginal successful the cannabis-stock craze, but has struggled successful caller years with ample losses, at 1 constituent utilizing its shares to wage its bills. Valued astatine much than $600 cardinal successful 2019, the company’s marketplace headdress stood astatine little than $200 cardinal arsenic of Tuesday’s close.
“Our absorption squad has spent the past 18 months executing a disciplined turnaround plan,” MedMen CEO Tom Lynch said successful a statement. “We are grateful to our stakeholders for their patience and enactment arsenic we worked to hole the concern and rebuild spot and credibility.”
Tilray said it and prime investors acquired $165.8 cardinal of notes and warrants from funds affiliated with Gotham Green Partners, which primitively invested successful an effort to rescue MedMen from a currency crunch. If converted, the notes and warrants would adjacent astir 21% of MedMen’s equity, the parties disclosed.
Tilray expects to besides contented 9 cardinal shares of its ain banal to Gotham Green successful the deal, but that portion of the woody is contingent connected shareholders approving the instauration of much shares successful a coming vote; otherwise, Gotham Green could person cash.
“Our quality to maximize worth from this game-changing transaction rests connected the enactment of our shareholders astatine the upcoming peculiar gathering to ballot connected our Authorized Shares Proposal, which volition summation the fig of authorized shares Tilray has disposable to not lone implicit this transaction, but besides to execute connected different strategical acquisitions,” Tilray CEO Simon said successful Tuesday’s announcement. “I cannot accent capable the value of making our shareholders’ voices number to alteration america to maximize our imaginable to make important worth for our shareholders successful the near-term and successful the future.”
MedMen separately announced a woody for different $100 cardinal successful funding from a radical of investors led by Serruya Private Equity.
Tilray shares gained much than 5% successful after-hours trading pursuing the announcement. The banal closed astatine $13.12, and has gained 58.8% truthful acold this year, arsenic the S&P 500 scale SPX, -0.71% has accrued 19.3%.